In the Colón Free Trade Zone, near the Caribbean entrance to the Panama Canal, the dated Perspex and glass buildings are emblazoned with brand names for electronics, perfumes and textiles. Behind loom vast warehouses and dozens of port cranes, while on the street, shop owners unload merchandise from shipping containers.
Established in 1948, the world’s second largest free-trade zone was envisioned as a wholesale redistribution centre for Latin America and the Caribbean, but it has become a global hub of counterfeiting, contraband and cocaine.
In November Europol arrested 49 members of a super-cartel centred on Dubai and accounting for about a third of Europe’s cocaine supply. One of those arrested was Anthony Martínez Meza, son of a director of the Colón Free Trade Zone, and suspected of organizing the shipments from Colón.
“Colón is one of the world’s great logistical hubs, but criminal organizations use this infrastructure to move drugs all over the world,” says Michael Chen, the president of Colón’s chamber of commerce. “Every day the situation seems to worsen … organized crime and gangs find more creative ways of getting through what’s left of my city.”
In front of Chen’s office, construction is nearing completion on a cruise port and duty-free shopping mall he hopes will bring more tourist dollars to the city. Around the corner, however, the city’s morgue regularly runs out of space for the stream of cadavers, many bearing signs of torture, that has surged as rival gangs look to control the drugs trade.
“The objective of the gangs is to gain control of the points where containers can be contaminated with drugs in the free zone and the ports” said Alejo Campos, the regional director of Crime Stoppers Latin America.
Cocaine arrives at the free trade zone either directly in container from Buenaventura, on Colombia’s Pacific coast, or through land routes, before being hidden in other containers bound for Europe and beyond. In the ports, trade unions have been co-opted by the gangs and turn a blind eye as workers stash packages and replace seals. Only 2% of cargo is passed through a container scanner designed to detect contraband. Meanwhile, underwater, divers weld “parasites” – long metal containers stuffed with cocaine – to the hulls of cargo ships. The majority of shipments intercepted by police in 2022 and 2023 were destined for Europe, according to Panamanian officials.
With US help, Panamanian authorities have scored some modest victories against the traffickers. In 2021 they confiscated 126 tonnes of drugs, mainly cocaine, up from 82 tonnes the previous year. Stings have taken down several of Colón’s cocaine kingpins and uncovered $10m in bills behind the wooden walls of a Colón house. In December Panamanian police said they had arrested 27 members of the Clan de Gulfo, one of Colombia’s largest narco-trafficking organizations, who they accuse of recruiting agents and moles in the security forces, judiciary and civil service.
But the resulting power vacuums have only led to more violence.
“There’s a huge territorial dispute right now,” said Campos. “The police actions have decapitated some of the gangs and new leaders have emerged looking to position themselves in their patch, and that’s when the killings begin.”
The collapse in security has accelerated the decline of what was once one of the Caribbean’s great cities.
“We had bars on every corner, we had restaurants and movie houses. Colón never slept,” said William Donadío, Colón’s renowned tailor, now 94. When he cut his first cloth in 1942, his clients included US servicemen and workers from the numerous multinationals with offices in the city. In the 1950s, he was among the crowds that lined the streets to witness the visit of the newly crowned Queen Elizabeth II and President Dwight Eisenhower.
“But everything that inflates,” he says, “eventually explodes.”
In 1964, riots against US control of the Canal Zone left the city in ruins. The Americans left in 1979, but returned a decade later when President George HW Bush ordered the invasion of Panama to remove Manuel Noriega.
Trash piles up on street corners and in the husks of the city’s art deco buildings. From the courtyard of the once grand but now deserted Hotel Washington, where Albert Einstein, Babe Ruth and David Lloyd George once laid their heads, the view over the Caribbean is blocked by the rusting hull of a sand-banked cargo ship. In the 2008 James Bond movie Quantum of Solace, Colón had the dubious honour of standing in for Haiti’s capital, Port-au-Prince.
Successive Panamanian governments have promised to drag Colón out of decline but have failed to make meaningful progress in reducing crime, providing basic services and improving quality of life for its citizens. Chen has proposed creating the Colón Security Committee, an alliance between the private sector, civil society and the government, to tackle crime. “If the government has monopoly of security then corruption infiltrates,” he says.
But Chen is competing against bigger forces. Major new investments from China, the US and Taiwan in port facilities, energy projects and mines are flowing into Colón. That brings opportunities for jobs and development but also crime and corruption in a city that continues to be both blessed and cursed by its strategic geography.
“Regardless of the fact that the old city has been decaying, Colón is a valuable piece of real estate,” says Donadío, who has lived through many boom-and-busts before. “The city will never again be the way it was, but it is still the link between two continents and two oceans. And right now, I feel there is something in the air. Colón is set to explode again.”
